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Carlson: City administrator may have caught Palace problems

A day after hearing a detailed report about the mishandling of funds at the Corn Palace, Mitchell City Councilman Phil Carlson said he now regrets voting against a proposal to add a city administrator to the city's government.

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In December, the council voted 5-3 in favor of adding a city administrator, who will oversee the city's department heads on a day-today basis and essentially act as an aide to the mayor. No one has been hired yet to fill the position.

Carlson voted against the proposal, along with Councilman Mel Olson and Councilman Randy Doescher.

"This morning, I'm regretting that vote," Carlson said in an interview Tuesday with The Daily Republic.

On Monday night, Russ Olson, an audit manager with the South Dakota Department of Legislative Audit, presented the council with a 20-page report detailing an audit of the city-owned Corn Palace's finances and operations. Olson performed the audit in mid-December, aided by two of his department's staff members, at the request of Mayor Ken Tracy.

The audit revealed former Corn Palace Director Mark Schilling routinely counted money from the city-owned arena and tourist attraction's cash registers alone in his office; failed to keep and maintain proper financial records and misused a city credit card on multiple occasions.

"If we had a city administrator in place, we may have caught this sooner or kept it from happening," Carlson said.

Tracy asked for Schilling's resignation after he was shown the initial results of the audit earlier this month. Despite the detailed report, Tracy said in an interview Monday he does not have evidence to suggest Schilling stole money or committed any crimes.

Coincidentally, Carlson announced Monday that he plans to resign next month so he can accept a position as the attorney for the Consumer Protection Division of the South Dakota Attorney General's Office.

Councilman Mel Olson said he does not think the presence of a city administrator would have prevented the issues brought to light by the audit.

"I continue to think a city administrator is more expensive bureaucracy that provides us nothing," he said.

Councilman Jeff Smith, who voted in favor of the city administrator proposal, said he thinks it's debatable whether a city administrator could have prevented this situation, but having someone in that position in the future will be advantageous for the city.

"It's definitely going to be beneficial for potential situations like this," Smith said.

Olson, who worked as a tour guide at the Corn Palace in the mid-1990s, believes many of the practices detailed in the audit have been in place for many years.

"It was old news," he said. "It seems to me we've been operating the Corn Palace that way for 20 or 30 years."

It is unfair, Olson said, to lay all the blame for the problems revealed by the audit on Schilling, given that the city's procedures were just as much at fault.

"I'm not arguing that they shouldn't be changed, but that portion of the report looks darker than it really is," he said.

Councilman Dave Tronnes said there is a need to review the procedures of other city departments to ensure there aren't other problems going unnoticed, even if that means hiring an independent auditor.

"I think it's our duty to find out," Tronnes said. "Are we missing the opportunity to fix things in other places?"

Councilman Randy Doescher also expressed his desire to ensure there aren't similar problems with other city departments.

"We have great employees working for the city," Doescher said. "We have to protect ourselves and protect those employees."

Doescher complimented Schilling's work to bring more entertainment to the Corn Palace in recent years, but said he was disappointed to learn about Schilling's misuse of a city credit card.

"For me, that's what really did it," Doescher said. "You just don't do that."

The audit describes at least seven instances in which Schilling made improperly documented or unusual charges to a city-issued credit card, including a $3,587.90 charge to American Airlines Vacations and the only documentation included was a confirmation statement from the airline, which did not include any details of the destination, travelers or accommodations — a violation of city policy, the report says. The charge was later determined to be for two individuals, Schilling and Assistant Corn Palace Director Jeri Mickelson, for a trip to Las Vegas to attend the Academy of Country Music Awards.

Councilman Steve Rice said he was also alarmed by Schilling's misuse of a city-issued credit card.

"The policy is pretty straight forward," Rice said. "We just need to make sure that it's being followed."

Doescher said he was also concerned that Schilling normally discarded detailed transaction records from the cash registers at the Corn Palace's concession stands.

"Mistakes can be made, but we have to have a paper trail," he said.

Calls made Tuesday to Councilwoman Susan Tjarks and Councilman Marty Barington were not immediately returned.